686 Circulars

GENERAL CIRCULARS

1. CCT’s Ref. No. AIII (2) /106/2004, dt. 02-07-2005

Sub : A.P. VAT Act 2005 – Evasion of tax by Edible Oil Millers

and Traders – certain instructions – Issued.

It is observed that certain Edible Oil Millers and Traders are issuing

invoices / way bills without mentioning the proper description of the oil which

is giving scope for adulteration and evasion of taxes.

So all the Deputy Commissioners (CT) are requested not to allow any

invoice / way bills issued by the edible oil millers and traders unless proper

description of oil with HSN Code are mentioned please instruct the traders

that if invoice / way bill is not covered by the above description such

transactions can be made in eligible to claim input Tax Credit.

All the Deputy Commissioners (CT) are therefore requested to issue

necessary instructions to the concerned authorities / traders / millers under

their jurisdiction, to ensure proper recording of sales and payment of tax.

The receipt of the Circular may be acknowledged immediately and also

a copy of the instructions issued in this regard to the subordinate officers

should also be furnished to this office.

2. CCT’s Ref. No. AIII (2)/57/2005, dt. 06-07-2005

Sub : A.P. VAT Act 2005 – AED leviable but made Zero by

Notification – Applicability of VAT Tax – Clarification

sought by A.P. Manufacturers and Traders Association of

Textile Fabrics (Coated with plastic), Secunderabad –

Regarding.

Ref : 1. Representation filed by A.P. Manufacturers and Traders

Association of Textile Fabrics (Coated with Plastics),

Secunderabad, dt. 25-05-2005.

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In the reference cited, A.P. Manufacturers and Traders Association of

Textile Fabrics (Located with Plastic) Secunderabad sought clarification on

applicability of VAT on PVC Cloth, Water Proof Cloth, Tarpaulin Cloth, Rexene

Cloth and 100% Cotton made fabrics i.e. items falling under Goods of Special

Importance Act.

In this connection they are informed that items, which attract

Additional Excise Duty but exempted by notification are outside levy of VAT

Tax.

3. CCT’s Ref. No. A III (2)/64/2005, dt. 06-07-2005

Sub : A.P. VAT Act, 2005 – Rate of Tax on Tarpaulin made up of

Plastic – Clarification sought by M/s. The A.P. Tarpaulin

Dealers – Association, Secunderabad – Regarding.

Ref : 1. Representation of the A.P. Tarpaulin Dealers

Association, Secunderabad, dt. 08-06-2005.

In the reference cited the A.P. Tarpaulin Dealers Association,

Secunderabad, sought clarification on the rate of tax applicable to plastic and

synthetic Tarpaulin as the said items are not specially covered by entry 86 of

the Fourth Schedule to APVAT Act.

In this connection they are informed that the above said items are

basically meant for packing or otherwise and they are deemed to have been

covered under Entry 86 of Fourth Schedule. Therefore Tarpaulin made up of

Plastic and Synthetic is taxable @ 4%.

4. CCT’s Ref. A III (2) / 201 / 2005, dt. 01-08-2005

Sub : A.P. VAT Act 2005 – Certain clarification on Paddy and

Rice under VAT Act – issued – Regarding.

Ref : CCT’s Circular Ref A1 (1)/92/2004, dated 23-11-2004.

The attention of all the Deputy Commissioners (CT) in the State is invited

to the subject and reference cited.

It has been observed that in the course of desk audit of VAT Returns

filed by Rice Millers and comparing with the RD1 Returns (RD Cess returns) it

is noticed that the Rice Millers are not reporting the entire sale turnover of

Rice made to the FCI and it is also found that some of the Rice Millers are not

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reporting the amount deducted by the FCI towards RD Cess payments, in

some cases the Rice Millers are also deducting the turnovers of stitching enrages

and AMC paid from the rice sale turnover.

The circular instructions issued vide reference cited, is relevant for

assessment of Rice Mills under the provisions of APGST Act only. The exemption

from levy of Sales tax under APGST Act on the RD Cess component of the

purchase value of the Paddy is under totally different context in the APGST

scenario where tax was levied on the purchase turnover of Paddy. The said

circular is not relevant under the provisions of the AP VAT Act 2005.

With a view to ensuring uniformity in assessments taking due

cognizance of the issues involved as noted below and established case law,

following instructions are issued under A.P. VAT Act for compliance.

1. Rural Development Cess.— As per G.O.Ms.No. 951, Revenue

Department, dt. 10-09-2003 exemptions was granted from levy of sales tax on

the R.D. Cess component present in the sale turnover of Rice. The above

notification is valid under APGST Act 1957 and the sale benefit of exemption

cannot be allowed under A.P. VAT Act 2005. As per the A.P. VAT Act provisions

in respect of Rice Millers, under sections 2 (38) and 11 (2) read with Rule 19 (2),

only the VAT paid or payable alone, is eligible for deduction from the total sale

consideration of rice sale made to the F.C.I. Hence, the R.D.Cess paid by Food

Corporation of India to the Commercial Taxes Department on behalf of the

Rice Millers forms a part of sale turnover of Rice, liable to tax under VAT Act.

2. Agricultural Market Cess.— The Hon’ble High Court of A.P. in the

case of State of A.P. v. Sri Lakshmi Traders (7 STJ 265) relying on the decision of

the Supreme Court in Anand Swaroop Mohan Kumar v. Commissioner of Commercial

Taxes (46 STC 477) which was again reiterated in Central Wines v. Special CTO

(65 STC 48) held that the Market Cess collected under the statutory obligation

cannot form part of taxable turnover.

The above Judgments were delivered when AMC was levied on purchase

of Paddy under APGST Act. Under A.P. VAT Act, AMC paid will become part

of value addition and form part of turnover when rice is sold to FCI. Hence

exemption need not be given on AMC under VAT as it constitutes taxable

turnover only.

3. Stitching Charges.— Stitching Charges are pre-sale expenses and

therefore form part of taxable turnover. Hence, exemption cannot be allowed

on this turnover.

4. Freight Charges.— As per the A.P. VAT Act provisions in respect

of Rice Millers, under sections 2 (38) and 11 (2) read with Rule 19 (2), only the

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VAT paid or payable is eligible for deduction from the total sale consideration

of rice sale made to the FCI. In these transaction freight charges becomes part

of sale expenditure only, since the quality check of rice is done at the FCI

premises. Freight is to be added to taxable turnover as the situs of sale is at

FCI premises / godown, after inclusion of transportation charges on supply of

rice.

5. Export Sales of Rice under section 5(3) of CST Act.— For claiming

zero rates sales, the transactions under section 5(3) of CST Act the following

documentary evidence is required :—

(a) Form H declaration;

(b) Purchase order from the exporter; and

(c) Evidence of export in the form of transport documentation as

above.

In the case of direct export, items (b) and (c) must be produced to establish

the claim of zero-rating. In the case of claims of zero-rating in the course of

export, the dealer / penultimate exporter must produce any of the above

documentary evidence to the concerned assessing authority stating that the

goods purchased are intended for export.

All the Deputy Commissioners (CT) requested to bear in mind the legal

positions as explained above.

Detailed instructions for making provisional assessments in this regard

will be issued shortly.

This instructions issued under the provisions of the section 77 of the

A.P. VAT Act 2005.

The receipt of the Circular shall be acknowledged.

5. CCT’s Circular No. AIII (2)/191/2005, dt. 18-08-2005

Sub : Filling of VAT Form 225 also by the Vat Dealers doing

business in Chillies, Cotton, Pulses and Dhalls.

In exercise of the powers conferred under section 77 read with

Rule 23(8) of the A.P. VAT Act and Rules 2005, the Commissioner of Commercial

Taxes, do hereby notifies that the VAT registered dealers doing business in

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Chillies, Cotton, Pulses and Dhalls shall submit a return in VAT Form 225 for

each tax period, i.e., for every calendar month in addition to the return in VAT

Form 200.

The notification shall come into force with immediate effect.

6. CCT’s Circular No. A III (1)-1, dt. 22-09-2005

Sub : Amendment to A.P. VAT Act, 2005 – Re-notification of HSN

Codes Industrial Cables – Clarification – Issued – Reg.

The Government recently amended the Schedules to the A.P. VAT Act,

2005 and among other things, the HSN Codes included in the Schedule-IV for

IT Products have been deleted. A notification for HSN Codes was issued

separately vide G.O.Ms.No. 1615, Revenue (CT-II) Department, dt. 31-08-2005.

In the light of the above changes, the queries have been raised by members of

the Electrical Trade regarding electric cables meant domestic use, as they are

now taxable @ 12.5%, whereas industrial cables are taxable at 4%. The issue

has been examined and it is hereby clarified that “Aluminium and Copper

Cables excluding single core wires upto 6 sq.mm” will be treated as industrial

cables. That means all single core cables upto 6 sq. mm will be taxable

@ 12.5%. This change is effective from 01-09-2005.

All the Deputy Commissioners are requested to communicate this

circular to their subordinates under their jurisdiction and to important Trade

Associations and dealers of these products.

7. CCT’s Circular No. A III (1)-2, dt. 22-09-2005

Sub : Amendment Rule 17 (4) of A.P. VAT Rules, 2005 –

Instructions – Reg.

All the Deputy Commissioners (CT) are hereby informed that Rule 17(4)

of A.P. VAT Rules has been amended with effect from 01-09-2005. A new

clause namely (1) has been inserted in Rule 17 (4). All VAT dealers engaged in

construction and selling of residential apartments, house buildings and

commercial complexes who opt for composition shall pay 1% of the total

consideration received or receivable or market value fixed for purpose of stamp

duty whichever is higher. In the new clause (1) to Rule 17 (4) provision for tax

collection at source is now made at the time of registration and this payment

shall be made by way of demand draft in favour of Commercial Tax Officer /

Assistant Commissioner concerned and the instrument has to be presented at

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the time of registration of the property to the Sub-registrar who is registering

the property, duly furnishing TIN and full postal address of the Commercial

Tax Officer / Assistant Commissioner on the reverse of the demand draft. The

sub-registrar shall then send the same to the Commercial Tax Officer / Assistant

Commissioner concerned every week.

The Deputy Commissioners (CT) are requested to see that the above

amendment is complied with. They are also requested to direct the assessing

authorities to coordinate with the sub-registrars concerned of Registration

Department and ensure that the amounts are collected and remitted property

from time to time.

The receipt of the above circular may be acknowledged.

8. CCT’s Circular No. A III (1)-3, dt. 22-09-2005

Sub : A.P. VAT Act, 2005 – Video Conference held with DCs on

05-09-2005 – Certain Clarifications – Issued – Regarding.

During the course of video conference on 05-09-2005, the Deputy

Commissioners (CT) have raised certain issues and clarifications were sought

for. The following clarifications are issued.

1. Rate of tax on Tobacco Oil.— As per Entry 67 of Schedule – IV to

the A.P. VAT Act, 2005, all kinds of vegetable oils are taxable @ 4%. Tobacco oil

also falls under this entry and hence is taxable @4%.

2. Is purchase of coal for steam generation eligible for input tax

credit.— The steam from coal can be used for generating power or for other

purposes. In case steam generated from coal is used for power generation,

then input tax credit should be restricted. However, if the steam is used for

purposes other than power generation such coal will be eligible for input tax

credit.

3. Sale of sim cards and recharge cards.— Sale of sim cards and

recharge cards are taxable. The goods actually sold in case of recharge cards

is the air time. As the goods are intangible goods tax should be levied at the

rate of 4%.

4. What is the proforma for seizure and confiscation of goods.—

As per section 45 (6) and Rule 56 (1) (a) goods can be detained and for this

purpose Form 610 can be used. However, a query has been raised whether

this form can be used for seizure and confiscation of goods under section 45 (7)

(b) and Rule 56 (2). It is hereby clarified that Form 610 can be used only for

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detention of goods. As no form is prescribed for seizure and confiscation of

goods the officers can issue a notice quoting the provisions of the Act. The

same procedure may be followed wherever specific forms are not prescribed

and the enforcement of the Act requires issue of notices.

The receipt of the above circular may be acknowledged.

9. CCT’s Ref. No. AIII (1)-4, dt. 26-09-2005

Sub : A.P. VAT Act 2005 – Levy of VAT on Sales of Ready Mix

Concrete Manufactured and sold – instructions – issued –

Regarding.

Ref : Note by DC (CT) Abids Division, dt. 21-09-2005.

The attention of Deputy Commissioners (CT) in the State is invited to

the subject cited, it is observed that the count output value is not being declared

by dealers and a portion of sale consideration is converted into other expenses.

One such instance was noticed in Abids Division, wherein a manufacturer

“Ready mix Concrete” claimed exemption on amounts charged and collected

by him toward freight and unloading charges from his customers on the sale

of “Ready Mix Concrete”. It is clearly known that ready mix concrete cannot

be accepted by customers unless it is prepared at the site of customer in proper

condition. “Sale Price” includes all the amounts charged in the bill and it shall

include any other sum charged for anything done in respect of goods sold at

the time of or before the delivery of goods. That means even transportation,

freight, loading / unloading charges collected in the bill form part of “Sale

Price” liable for VAT.

Therefore all the Deputy Commissioners (CT) are requested to verify

similar cases in their divisions, and take immediate action for collection of

VAT and penalty / as interest as applicable and report compliance.

The receipt of this circular shall be acknowledged.

10. CCT’s Circular Ref. No. AII (2)/407/2005, dt. 04-10-2005

Sub : Guidelines for finalization of assessments under Rule 6(3)

(1) of the APGST Rules 1957 – Reg.

In supercession of all the earlier guidelines and instructions, issued

with regard to the finalization of the assessments under Rule 6(3)(1) of the

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APGST Rules 1957, the following guidelines are issued :—

1. Rule 6(3)(1) reads as follows :—

“In cases where the execution of a works contract extends

over a period of more than one year, the total turnover for the

purpose of sub-rule (2) for that year shall be deemed to be the

value of goods purchased for being supplied or used in the

execution of such contract in that year”

2. In the case of Gannon Dunkerly & Co. v. State of Andhra Pradesh,

23 APSTJ 195; the Hon’ble High Court of Andhra Pradesh held as follows :—

“In W.P.No. 17415/1995, the validity of Rule (3) and (4)

questioned. As sub-rule (4) has already been omitted by

G.O.Ms.No. 788, Rev. (CT-II), September 21st, 1996, the challenge

has to be confined to Rule 6 (3). It was submitted that the first

portion of the sub-rule imposes a tax on the value of the goods

purchased for being supplied, where the contract extends more

than a year, even though it may not be ultimately used in the

contract. There appears to be some force in this contention. The

Supreme Court has held in the case of State of Madras v. T. Narayana

Swamy Naidu (18) that the stock in hand may or may not be sold or

consumed and could even be destroyed, and therefore, unless the

taxable event has occurred, it can not be taxed perhaps, the

intention of this sub-rule, was only that, but it is not happily

worded. If the words “for being” is substituted by the word

“and”, it would be clear that only the value of the goods purchased

and supplied or used in the execution of such contracts in that

year would be liable to be taxed. It must be remembered that in

respect of the goods used in the execution of contracts, there is no

sale price as such, and therefore, the turnover pertaining to the

goods involved in the execution of the contracts refers only to the

purchase turnover. The purchases so made will not be liable to

tax unless actually supplied or used in the execution of such

contracts. Accordingly, the turnover must be limited only to

such supply or use, and cannot, extend to the stock in hand at the

end of the assessment year as held by the Supreme Court. Instead

of declaring the rule to be invalid, we are of the opinion that it

would be appropriate to read the rule to mean only that and no

more”.

3. It may be observed from the above that while making a general

observation that there is no sale price as such in respect of the goods used in

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the execution of the contracts, the Hon’ble Court observed that the turnover

in the case of works contract is only the purchase turnover. These observations

are not with reference to Rule 6 (3) (1), but with reference to the concept of

taxation of works contracts as such. The Hon’ble Court has however not

referred to the measure of tax in this context, as the simple question for decision

was whether the value of all goods purchased during the year is to be taxed or

the value of goods purchased and used alone is to be taxed. Hence, the essence

of the above decision is that the turnover should be limited only to such supply

or use and could not be extended to the stock in hand at the end of the

assessment year. The court read the rule to mean only that and no more.

Therefore, it cannot but be said that the value of the goods purchased and

supplied or used in the execution of a contract is nothing but the value of the

goods at the time of incorporation, since the measure for imposition of tax was

left untouched by the above said decision of the Hon’ble A.P. High Court.

4. This interpretation of the said decision of the Hon’ble High

Court gains strength from the decision of the Hon’ble Supreme Court in the

case of Gannon Dunkerly v. State of Rajahstan, 88 STC 204, wherein it is held as

follows :—

“Though the tax is imposed on the transfer of property in

goods involved in the execution of a works contract, the measure

for levy of such imposition is the value of the goods involved in

the execution of a works contract. We are however, unable to

agree with the contention urged on behalf of the contractors that

the value of such goods for levying the tax can be assessed only

on the basis of the cost of acquisition of the goods by the contractor.

Since, the taxable event is the transfer of property in goods

involved in the execution of a works contract and the said transfer

of property in such goods takes place when the goods are

incorporated in the works, the value of the goods which can

constitute the measure for the levy of tax has to be the value of

the goods at the time of incorporation of the goods in the works

and not the cost of acquisition of the goods by the contractor”.

5. It is categorically held in the said decision that the measure for

the levy of tax has to be the value of the goods at the time of incorporation and

not the cost of acquisition of the goods by the contractor. Hence, the turnover,

on a harmonious interpretation of both the above decisions, is neither the

purchase value nor the sale value but the value of the goods at the time of

incorporation.

6. The words, “purchase turnover” in the above said decision have

been used by the Hon’ble High Court of A.P. only in the above context and only

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to draw a contrast between the sale turnover and the turnover involving the

value of the goods at the time of incorporation. It is not said therein that tax

shall not be levied on incorporation value. In view of the decision of the

Supreme Court, mentioned above, it is only the value of the goods at the time

of incorporation that has to be considered for the purpose of levy of tax under

Rule 6(3)(1).

7. The next question would be whether Rule 6(3)(1) granted any

concession to adopt lesser value for the purpose of that rule. The rule simply

says that in the given circumstances the total turnover for the purpose of

sub-rule (2) for that year shall be deemed to be the value of the goods purchased

and used and thus simply says what should be the total turnover for the

purpose of Rule 6(2) and nothing more than that. Rule 6(2) speaks that tax

shall be levied under section 5-F of the Act and the procedure for arising at the

turnover. It is settled law that under section 5-F, tax has to be levied only on

the value of the goods at the time of incorporation.

8. In the above-mentioned decision, the Hon’ble High Court held

that “section 5-F was a conscious effort to increase the revenue by levying

separate tax on goods involved in works contract”. Such being the case, there

is no intention made known through Rule 6(3)(1) that tax would be levied on

a lesser turnover, resulting in decrease in the revenue.

9. Further in Rule 6(3)(1), the word, “value” in the expression “value

of the goods, purchased and supplied or used” should be interpreted in the

light of the provision in section 5-F of the Act, as interpreted by the Hon’ble

Supreme Court of India in the case of Gannon Dunkerly v. State of Rajahstan (88

STC 204), since the Rule is silent on the question whether the value is “purchase

value” or “value at the time of incorporation”.

10. In the above background, particularly in the absence of any specific

observation by the High Court against the adoption of the value of the goods

at the time of incorporation, the charge created by section 5-F, is necessarily

on the measure for the levy of tax, as determined by the Hon’ble Supreme

Court in Gannon Dunkerly’s case. The Rule 6(2) and 6(3) were also inserted

immediately after the said decision of the Hon’ble Supreme Court. The contents

of the Rule 6(2) are extracted word by word from the said decision of the Apex

Court. In view of the said binding decision of the Supreme Court and High

Court on the interpretation of measure for the levy of tax, for the purpose of

Rule 6(3)(1) also, the value of the goods at the time of incorporation has to be

considered.

11. All the authorities, concerned, may keep in mind the above legal

position. They are requested to examine all the cases of assessments, finalised

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or to be finalized, in the light of the above discussion and take appropriate

action by exercising their independent judgment with respect to the individual

circumstances of each case.

11. CCT’s Circular Ref. No. S1/888/2005-06 dt. 24-10-2005

Sub : A.P. VAT Act – Adoption of Gross Revenue as Net Revenue

realized Plus Refunds – Certain instructions issued –

Regarding.

As discussed in recent Deputy Commissioners (CT) conference, revenue

performance of divisions will be judged on the basis of Net Revenue receipts

under A.P. VAT Act 2005 plus refund amount paid during the same month.

Therefore all the Deputy Commissioners (CT) are requested to separately

show Net VAT revenue remitted and refund amount if any while submitting

monthly statistical information. They will be given credit for the total of net

VAT revenue plus refunds paid.

12. CCT’s Ref. No. A III (1)-5/2005, dt. 27-10-2005

1. Prioritization of credit returns to be verified.— All the credit

returns have to be segmentised into different categories, basing on the nature

of transactions, amounts of credits involved and commodities, involved. Such

credit returns in cases, in which the inputs are taxable @ 12.5% and outputs

are taxable @ 4%, the inputs are taxable @ 12.5% and outputs are involved in

inter state sales or exempt transactions, the inputs are taxable @ 4% or 12.5%

and the outputs are exported, where sales tax relief has been claimed etc., may

be eliminated from the total credit returns and the remaining credit returns

have to be segmentised into slab-wise and commodity-wise. All the returns,

involving claim of credit, more than Rs. 50,000/- in case of small divisions and

more than Rs. 1 lakh in case of larger divisions have to be examined with

reference to the sensitiveness of the commodities involved in those returns

and priorities the returns to be verified. Such prioritized returns shall be

thoroughly verified by conducting specific audits and intimate the results.

There shall be fifteen (15) VAT audits conducted by each circle in the month of

November, 2005. These audits must be allocated between CTO and DCTOs in

the circle.

2. Verification of NIL Returns.— The NIL returns have to be

segregated into those, filed by the dealers, continuing to exist on transition

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from APGST regime to VAT regime and those filed by the newly registered

VAT dealers. The NIL returns filed by the newly registered VAT dealers have

to be analyzed with reference to their antecedents i.e., whether earlier they

had APGST registrations and cancelled to obtain new VAT registrations in

their place so as to distract the attention of the Department to their earlier

business activities. The newly registered VAT dealers of such a category, who

have been continuously filing NIL returns, have to be selected for audit and

thorough verification has to be made. Simultaneously steps have to be taken

to cancel all the newly issued VAT registrations in the case of dealers, who

have been filing NIL returns consecutively for more than 3 months.

3. Enforcement of filing of additional returns along with monthly

returns.— In the absence of additional returns (i.e., Form 200-A, 200-D, 200-E,

200-G, 225 etc.) to be filed long with monthly returns, it is proving difficult to

verify some aspects like excess ITC, claimed by certain dealers. Therefore,

filing of the additional returns along with monthly returns should be enforced

strictly in all sensitive and large tax cases.

4. Issue of statutory forms to the newly registered dealers.— It is

noticed that in several case, statutory forms were issued indiscriminately to

the newly registered dealers, who have been surprisingly filing NIL returns

continuously. Registrations are also issued to a large number or people

indiscriminately without verifying whether all the statutory requirements

are fulfilled or not. As result, there is necessary proliferation of RC’s and NIL

returns. Therefore, all the cases, where statutory forms were issued, but NIL

returns are continuously filed have to be audited on priority basis. Before

issuing statutory forms to newly registered dealers, advisory visit should be

made to ascertain the genuineness of the purpose, for which the issue of

statutory forms was sought.

5. Identification of pending APGST assessments, having revenue

potential.— The CTO’s may be directed to review all the pending assessments

under APGST and identify top 20 assessments in terms of revenue potential

and finalise them by the end of December 2005.

6. Identification of cases of assessments of works contractors,

resulting in substantial amounts of demands.— All the assessments, pending

in respect of Works Contracts, shall be reviewed in general and also in the

light of the recent circular instructions, issued on the application of Rule 6(3)

(i) of the APGST Rules to the Contracts, extending for more than one year and

identify the top 5 or 10 assessments in terms of demand involved. Such

assessments should be taken up for assessments or revisions, as the case may

be and finalised by the end of December 2005.

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7. Identification and collection of 10 best cases of Old Arrears.—

All the cases of old arrears in all the circles have to be reviewed separately and

10 best cases of old arrears in terms of amount, involved, and collect ability

should be identified and the collection of the arrears in such identified cases

shall be closely monitored as to complete the collection positively by the end

of December 2005. All the cases, shown as covered by Stays, granted by various

authorities and also shown as covered by proceedings of BIFR shall be reviewed

and the information thereof should be updated with a view to ascertain their

collectability.

8. Enforcement of 100% filing of AA9 Returns.— Filing of AA9

returns and payment of tax due thereon cent percent has to be enforced, since

it is already long overdue. This item of work should be completed by November

2005. The cases, where TOT returns were filed, but AA9 return was not filed

may be identified and audits may be conducted in such cases.

9. Issue of Registration Certificated under VAT to new dealers.—

Registration Certificated under VAT are issued indiscriminately without

observing the statutory requirements. Proper scrutiny of the information,

provided in the Form VAT-100 and entry into VATIS is not being done. In

many cases, taxable sale is not taking place within 45 days from the EDR.

Therefore, all the CTO’s should observe all the requirements before issuing

RC’s. In all sensitive cases, pre-registration visit shall invariably be made.

13. CCT’s Ref. No. A III (1)-6/2005, dt. 27-10-2005

Sub : A.P. VAT Act 2005 – New Registrations – Precautions to be

taken – Instructions issued – Regarding.

It has come to the notice of the Commissioner (CT) that VAT Registrations

are being issued in the circles without following the due procedures and

without taking minimum precautions. In certain cases TIN’s were issued

after 01-04-2005 and investigations have revealed that they are bogus. Such

situations can be avoided to a large extent if minimum care is taken at the time

of issue of R.C. The procedures to be followed are already mentioned in the

Registration Manual supplied to all the officers. In addition, it is advised that

the following procedures be adhered to by the field’s officers.

1. Whenever VAT 100 application is received, certain minimum

checks need to be carried out. The Processing Officers / Registering

Authorities should verify the date of first taxable sale declared. If

such date is beyond 45 days of date of application, the application

may be rejected and the dealer may be advised to apply within

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the eligible time frame i.e., 15 days prior to the date of first taxable

sale and not prior to 45 days of first taxable sale. For eg. The

application is received on 01-06-2005, and the date of first taxable

sale is shown as 01-08-2005, i.e., the gap between the date of

application and date of first taxable sale is more than 45 days. In

this case TIN can be rejected (except for start-up business).

2. In case the dealer has not started his business and if the declared

taxable turnover in a year is less than Rs. 40 lakhs, the dealer

may be persuaded (wherever possible) to apply for registration

after commencing the business. In some cases, even though

there is no “sale” in the hands of the applicant, applications for

TIN’s are being received. The dealers may be counseled in such

cases.

3. Pre registration visits may be carried out wherever the

Processing Authority / Registering Authority is doubtful about

the particulars given in the VAT-100 application. Special care

needs to be taken in case of sensitive commodities.

4. Whenever a pre registration visit / advisory visit is to be

conducted by an officer other than the Registering Authority, the

Registering Authority shall give a written authorization to the

officer designated for conducting the visit.

5. In case advisory visit is conducted after issue of registration, the

file needs to be updated with the latest particulars collected during

the visit and should also be fed into the VAT is program in the

computer. The visiting officer should give a clear report in writing

as to what his findings are.

6. If the dealer has not given any details of bank account in the VAT-

100 application, the bank account should be insisted atleast at

the time of advisory visit to the dealer. If the dealer fails to give

particulars of his bank account within a fixed time frame, then

the Registering Authority may proceed to cancel the R.C. on such

grounds after giving an opportunity to the dealer.

7. The first VAT return filed by the dealer should be compared with

the estimated turnover declared on Form VAT-100. If the turnover

appears to be less, the reasons may be ascertained. If the second

VAT return filed by the dealer is “NIL” i.e., there is no taxable sale

even at the end of 60 days, then the R.C. may be cancelled after

giving notice to the dealer.

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700 Circulars

8. Whenever a new dealer applies for statutory forms, the CTO/AC

may exercise caution in issuing the same. As far as possible an

advisory, visit may, be carried out before issue of any statutory

forms. If the dealer applies for statutory forms, subsequently, the

utilisation details of the forms issued earlier may be compulsorily

obtained and compared with the returns filed, if any.

9. The Registering Authorities are advised to exercise due care at

the time of issue of R.C., by following various methods like

examining available records, pre registration / advisory visits,

counselling / advising the dealer.

10. Instead of issuing R.Cs indiscriminately and cancelling some of

them at a later date, it is preferable that R.Cs are issued with due-

caution.

11. It is suggested that the Deputy Commissioners (CT) should review

the status of new registrations issued in their divisions every

month, whether the first return has been filed and whether any

statutory forms were obtained in the new cases.

12. Disciplinary proceedings will be initiated against those officers

who do not exercise due care and diligence in adhering to the

procedure discussed above.

14. CCT’s Ref. No. A III (1)/388/2005, dt. 27-10-2005

Sub : A.P. VAT Act 2005 – Action plan for VAT implementation

and Circular on precautions to be taken for new registra-

tions / issue of statutory forms – Certain instructions –

Issued – Regarding.

Please refer to the discussions during the Deputy Commissioners (CT)

conference held on 19th and 20th October, 2005.

The need to focus on verification of credit returns, “NIL” returns as well

as exclusive due diligence while issuing statutory forms was emphasized.

Please find attached,—

1. Action Plan for VAT implementation.

2. Circular on precautions to be taken for new registrations / issue

of statutory forms.

701

All the Deputy Commissioners (CT) should ensure that the Action Plan

is scrupulously followed. Further the circular relating to registrations and

issue of statutory forms should be meticulously complies with. Deputy

Commissioners (CT) should ensure compliance in all offices under their

jurisdiction.

All Senior Officers are requested to monitor compliance with these

instructions during their visits to the divisions in November, 2005.

15. CCT’s Circular No. AIII (1)/7/2005-06, dt. 28-10-2005

By G.O.Ms.No. 1564, Revenue (CT-I) Department, dt. 17th August, 2005

published in A.P. Gazette dt. 18th August, 2005, some changes have been made

to the entries in the schedules to A.P. VAT Act, 2005. One of the important

changes made is with regard to the Entry 52 dealing with Readymade

Garments. The following words “bed sheets, pillow covers, towels, blankets,

traveling rugs, curtains, crochet laces, zari, embroidery articles and all other

made ups” have been added to the Entry 52.

It is noticed that many dealers are not paying taxes on the items

mentioned above though they were hitherto falling under the residuary entry

in Schedule-V to the A.P. VAT Act, 2005. To reduce the tax burden on these

items and also to avoid confusion, specific items were added by an amendment

to the Entry 52 of Schedule-IV. There is substantial revenue potential in these

items because the dealers were earlier camouflaging the sales of these items as

sales of cloth attracting AED.

It is, therefore, felt necessary to clarify that any processing done to

textiles subsequent to production through power looms will categorise them

into “made ups” and no AED is attracted subsequent to the production of

cloth from the power looms. All the officers working at the field level are

requested to identify the dealers dealing in such items, scrutinize their VAT

returns carefully and also to verify the transactions during the course of VAT

audits and ensure that the tax @ 4% on sales of these items is collected.

While implementing these instructions, the officers should also take

into account the entry 21 in Schedule-I to the Act dealing with the “goods

produced from handlooms” and the circular issued earlier in this regard. The

products coming out of handlooms are to be treated as exempted under the

provisions of A.P. VAT Act, 2005. At the same time any cloth produced from

power looms and processed at a subsequent stage, for example, a sari coming

out of a power loom processed further by some zari work or hand work etc.,

shall be liable to tax @ 4%.

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702 Circulars

The Deputy Commissioners (CT) of the divisions are requested to see

that the instructions are fully complied with and the taxes involved are

collected at the earliest.

16. CCT’s Ref. No. AII (2)/722/2005, dt. 23-11-2005

Sub : Instructions before issue of Statutory Forms – Regarding.

Ref : 1. FAPCCI Ref. No. 1243, dt. 21-10-2005.

2. Andhra Pradesh Plastic Manufacturers Association

Ref. APPMA/2005, dt. 18-10-2005.

All the Deputy Commissioners (CT) in the state are hereby directed to

issue instructions to all the authorities concerned to issue statutory forms, i.e.

way bills, “C” Forms etc., promptly and in sufficient number to prevent

inconvenience caused to the dealers. However, before issuing such Statutory

Forms, they may be scrupulously abide by the following guidelines :

1. The utilisation of Statutory Forms issued previously should be

thoroughly verified with reference to the return filed and taxed

paid.

2. Waybills received from the check posts should be reconciled with

reference to the returns filed regularly.

3. Restriction of scope of forms need be considered, only when the

sensitive goods are involved.

4. The C/F/H forms filed by the dealers in the last quarter must be

thoroughly scrutinized with reference to the returns filed.

17. CCT’s Ref. No. A III (1) 184 / 2005-9, dt. 06-12-2005

Sub : A.P. VAT Act and Rules, 2005 – Guidelines to improve the

compliance levels and to prevent the leakage of revenue –

Issued – Regarding.

During the course of reviews made by Senior Officers in the month of

November, 2005, several omissions and shortcomings were noticed with

regard to implementation of VAT at field level. An action plan was already

issued vide our Circular No. A III (1)-5/2005, dt. 27-10-2005 giving guidelines

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for the steps to be taken to improve compliance levels and to prevent the

leakages of revenue. The Senior Officers visits have revealed that more

emphasis needs to be put on the following areas for better results :—

1. Prioritisation and verification of credit returns.— Physical

verification of stocks is essential for credit return audit and this must

invariably be conducted.

2. Verification of NIL returns.— Last years tax payers in some cases

had filed NIL returns this year.

3. Filing of additional returns and restricting input tax credit /

transition relief whenever branch transfers and consignment sales occur.

4. Finalising revenue yielding pending APGST assessments on

priority.

5. Works contracts assessments.

6. Verifying applications for fresh registrations carefully to restrict

bogus dealers. All assessing authorities are requested to focus on these issues.

Further, new areas of revenue mobilization need to be carefully followed up.

These include :—

1. Tax on sale of food in hotels, clubs sweet shops and other eating

establishments.

2. Tax on sales made up textile industry, bed sheets, pillow covers,

curtains, worked saris etc.

3. Tax on sales of food in private residential schools / colleges to

students.

4. Tax on leases of TV and commercial films.

5. Tax on sale of good and goods in hospitals.

In this background the following further clarifications are issued.

1. Cross Check References.— It is seen that cross check references

are being sent indiscriminately. One CTO was sent more than 1,000 invoices

in one dealer’s case for verification to another CTO. This situation has led to

overload of cross check and must be curbed. The references are also found to

be issued in a casual manner in some cases where invoice values are below

Rs. 1,000. The VATIS audit facility is now available. This should be utilised

invariably in cross check.

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704 Circulars

The two types of invoices should be selected. The first category is of

priority nature called “urgent”. The second category is of “routine” in nature

where the verification could be taken up at the other end as a part of

normal VAT audit in due course. The officers should follow the guidelines in

Chapter-5 (5-10) at page 27 of the Audit Manual. While sending the references,

the concerned circle must be identified by using the facility in VATIS package

so that the reference goes only to the officer concerned and not to other

officers.

2. Dealer ledger for way bills / “C” Forms is not being maintained at

circle level. This should invariably be done. So that utilization of way bills /

“C” Forms is monitored effectively. Further, while issuing APGST assessment

orders, all assessing authorities will devote a specific paragraph to exami-

nation of issue and utilisation of all statutory forms.

3. Irregularities noticed in ITC claims :

(a) ITC claimed on the of delivery challans issued without issue of

any invoice (i.e., seller has not paid tax).

(b) Freight charges not added to final value of product; separate

invoice issued for freight charges.

(c) Credit notes not accounted for specially in fertilizers, drugs,

paddy and rice, agencies resulting in vary large number of credit

returns.

(d) Purchases of Paddy and Rice by Rice Millers : It is observed that

rice millers are showing purchases of paddy and rice from other

VAT dealers and claiming input tax credit. This prima-facie requires

verification as rice millers rarely purchase from each other.

Generally Paddy is purchased only from farmers and the value

of such purchases should be reflected in Box No. 6-A. Officers

must carefully scrutinize VAT returns of Paddy and rice dealers

to see whether any value is reflected in Box No. 7A of VAT return

and such cases must be immediately taken up for VAT audits and

for cross verification.

4. Assessment procedures.— It is observed that while making an

assessment by issuing 305-A and 305, the orders are not speaking orders which

may affect the sustainability of such orders in appeals. It is, therefore, to be

ensured that the reasons for levy of additional tax over and above the tax

declared in the returns must be clearly spelt out in a detailed manner and

705

VATIS provides such a facility to incorporate the speaking order in 305-A and

305. The quantum of output tax and input tax identified must be clearly

mentioned for each month separately in 305-A and 305.

5. Transitional Relief.— It is observed that the work is not yet

completed in some of the divisions. The pendency is very high in respect

of divisions like Kadapa and Vizianagaram. This must be completed by

15th December, 2005 without fail as all claims must be fully paid by February,

2006. Further verification of transitional relief claims must continue as an

ongoing basis along with audit. Certificates should also be insisted upon from

chartered Accountants for the amount of transitional relief claimed in terms

of earlier instructions.

6. AA-9 & APGST Returns.— It is observed that the compliance of

AA-9 returns is not satisfactory in terms of number of returns received and in

terms of accuracy and verification of return filed. This aspect will be reviewed

and any short fall will be viewed seriously. Further for APGST returns above

Rs. 40 lakhs amount the deadline for receipt of CA reports is completed on

November. These reports should be insisted upon and Rs. 1 lakhs penalty

invariably levied on late filers.

7. Allocation of VAT Audits.— It is observed that DCTOs are not

being given adequate number of audits to be done. Every DCTO should be

given atleast two VAT audits per week. Similarly, AC (Audit) is found to be

not showing initiative to take up audits.

8. Levy of Penalty.— It is observed that penalty is not being levied

according to the penalty structure prescribed in VAT Law. Any instances of

failure to levy the correct quantum of penalty will be viewed seriously.

9. Advisory Visits.— It is observed that the number of advisory

visits taken is inadequate and the collection of data during advisory visits

and updation of database in the VATIS package are also not being done properly.

The objectives of advisory visits are :

(i) Guiding tax payer to know his VAT obligations.

(ii) Collecting the data to analyse the business of the VAT dealer.

(iii) Updation of the data base.

Receipt of this circular should be acknowledged. Deputy Commissioners

(CT) are requested to review performance of their subordinates based upon

VAT Implementation Plan issued earlier and these instructions.

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706 Circulars

18. CCTs Ref. A.III (1)/184/2005-08, dt. 09-12-2005

Sub : APVAT Act 2005 - Ordinance further to amend the Andhra

Pradesh Value Added Tax Act, 2005 - Issued - Amendment

to sub-section (9) of section 4 of the Act - Instructions issued

- Reg.

Ref : 1. Andhra Pradesh Ordinance 24 of 2005, dt.24-11-2005

An Ordinance to amend the APVAT Act was promulgated vide reference

cited, where in existing sub-section (9) of section 4 of the Act was substituted

as under.

“(9) Notwithstanding anything contained in the Act,

every dealer running any restaurant, eating house, catering

establishment, hotel, coffee shop, sweet shop or any establishment

by whatever name called and any club, who supplies by way of

or as part of any services or in any other manner whatsoever of

goods, being food or any other article for human consumption or

drink shall pay tax at the rate of twelve and half percent (12.5%)

on sixty percent (60%) of the taxable turnover, if the taxable

turnover in a period of preceding twelve months exceeds Rs.

5,00,000/- (Rupees five lakhs) or in the preceding three months

exceeds Rs. 1,25,000/- (Rupees one lakh twenty five thousand).”

It is clarified that all the dealers covered under revised section 4(9) and

liable to be registered compulsorily for VAT. They are also eligible to claim

input tax credit based upon valid VAT invoice. Consequent to this amendment,

certain action has to be initiated by the department to identify all these dealers,

ensure that they are registered, file monthly return & pay taxes regularly. The

following instructions should be scrupulously adhered to.

1. The provisions of the sub-section (9) of section 4 of APVAT Act

are applicable to every dealer running any restaurant, eating

house, catering establishment, hotel, coffee shop, sweet shop or

any establishment (Bar & restaurants, canteens, messes etc.) by

whatever name called and any club.

2. The CTO, has to identity such dealers mentioned in point 1 above

whose taxable turnover in last 12 months is more than Rs.

5,00,000/- or more than Rs. 1,25,000 during the last 3 months

period.

Such dealers can be identified by verifying the Turn over Tax returns

filed by them for last two quarters and / or by verifying the AA9 returns filed

707

by them for the year 2004-2005. In addition for persons who have not filed

returns earlier, the CTO concerned should obtain the particulars of expenditure

incurred on purchase of gas (commercial use), purchases of cool drinks, ice

creams, milk, electricity consumption and expenditure on establishment of

the dealer including rent to estimate his sales turnover and determine his

eligibility for registration under VAT.

3. All such dealers should be issued VAT registration with EDR

from 01-12-2005.

4. Such dealers will have to pay tax @ 12.5% on 60% of the taxable

turnover which amounts to 7.5% on taxable turnover, and are

eligible to claim Input Tax Credit on eligible inputs.

These dealers shall collect tax @ 12.5% on 60% of the bill amount.

Alternately these dealers can collect tax @ 7.5% on total value of the bill from

the customer.

For Example : If the Total value of the bill is Rs. 100

60% of the value Rs. 60

Tax @ 12.5% on Rs. 60* 12.5% Rs. 7.50

Total value (bill value Rs 100 + Tax Rs. 7.50)

Alternate method

Total value of the bill Rs. 100

Tax @ 7.5% on Rs. 100* 7.5% Rs. 7.50

Total value Rs. 107.50

Since 7.5% is not a VAT rate following the former method where a tax of

12.5% is shown is desirable.

In case, the amount collected is inclusive of VAT, then the dealer should

bifurcate his turnover for the purpose of calculation of out put tax assuming

that the total value of the bill is inclusive of tax @ 7.5%.

The tax element by applying tax fraction i.e., X* 7.5 / 107.50. Where X is

the total bill value. Since the dealer has to pay @ 12.5% on 60% value he has to

take the total value of the bill less tax element and takeout 60% of the remaining

turnover and arrive at output tax @ 12.5%.

For example :

A. The total value of the bill including tax Rs. 100

B. Tax fraction 100 x 7.5 / 107.5 Rs. 7

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708 Circulars

C. Value of the food items (A-B) Rs. 93

output tax in this case is Rs. 7

D. 60% of C is (93 x 60%) Rs. 56

E. Tax @ 12.5% on 60% value i.e. Rs 56 Rs. 7

F. Output tax in this case is Rs. 7

The provisions of the amended section are now applicable to bar and

restaurants also. However to arrive at taxable turnover, for the purpose of

calculating output tax, the turnovers relating to sale of liquor served in bar

and restaurant shall be excluded. The remaining turnover should be treated

as taxable turnover and subjected to calculation as mentioned above to arrive

at output tax.

5. Hither to the dealers with taxable turnover exceeding Rs. 5 lakhs

but below Rs. 40 lakhs were paying tax @ 1% on their taxable

turnover. All these dealers are how liable to pay at the revised

rate due to increase in tax rate. For example : A Hotel with

Rs. 10,00,000/- food sales for a period was liable to pay

Rs. 10,000/- only as tax prior to the amendment whereas the

same hotel has to pay now Rs. 75,000/- towards tax due on same

turnover less input tax credit eligible.

It may be noted that consequent to the amendment, there are only two

categories of hotels, eating establishments :—

(a) those with turnover below Rs. 5 lakhs per annum which

are totally exempted;

(b) those above Rs. 5 lakhs per annum which will pay 12.5%

on 60% of the turnover and avail input tax credit. There is

non-composition scheme for restaurants, eating houses,

hotels, clubs etc.

6. Effective steps should be taken by all assessing authorities to

register all dealers to arrest evasion and to ensure proper filing of

returns and prompt payment of taxes.

The Deputy Commissioners should issue suitable instructions to the

subordinate officers and shall monitor the progress of implementation of the

instructions periodically and report compliance.

The receipt of these instructions should be acknowledged by return

Mail.

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19. CCT’s Ref. No. AIII (1)/2005-12, dt. 05-01-2006

Sub : A.P. VAT Act 2005 – G.O.Ms.No. 2201, dt. 29-12-2005 –

Issued amending the A.P. VAT Rules 2005 – Certain

Clarifications Issued – Regarding.

Ref : 1. G.O.Ms.No. 2201 Revenue (CT-II) Department,

dt. 29-12-2005.

In the G.O. cited above certain amendments were made to the APVAT

Rules, 2005. In this regard following clarifications are issued for proper

implementation of the G.O.

I. Rule 16.— Clause (e) in sub-rule (3) is inserted explaining the

procedure to adjust credit notes issued for discounts or sales incentives. This

comes into effect from 01-12-2005 procedure prescribed earlier for adjustment

of credit notes in case of sales returns may be followed. All credit notes

date from 01-12-2002 on wards issued by selling dealers in respect of

post-sale discounts / incentives shall not disturb tax component in the

original invoice.

II. Rule 20 (2).— Clause (h) is substituted, in which “Natural Gas,

Naphtha and Coal unless the dealer is in the business of dealing in these

goods” are made intelligible for input tax credit. In this (entries) Natural Gas

and Naphtha are made ineligible w.e.f. 01-04-2005.

Entries in clause (n), (o), and (p) added are made ineligible for claiming

input tax credit w.e.f. 01-04-2005.

III. Rule 37 (2).— The sales tax credit authorized by the CTO is now

allowed to be claimed by the VAT dealer from August 2005 to March 2006 in 6

equal installments but in consecutive months, instead of August 2005 to

January 2006 prescribed earlier.

Accordingly it is clarified that revised returns (in From VAT 200 only)

may be obtained in case of VAT dealers where authorization of claim made is

delayed; from August 2005, if possible or at least from October 2005 so as to

allow the dealer to claim in 6 consecutive months. Accordingly the returns

filed earlier can be modified by the CTO, since assessments for the months

from August 2005 have not been taken up.

Forms 200-G and 200-H are inserted to be filed by the VAT dealers

liable to restrict Sales Tax Credit as per conditions in Rule 20 by using formula

AxB/C. In this A is 1/6th value of sales tax relief, B is the taxable sales turnover

and C is the total sales turnover during the tax period or during the last 12 tax

period as the case may be (This is w.e.f. 01-12-2005).

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710 Circulars

IV. Rules 55, 56, 57 are procedures relating to transportation of goods

in a goods vehicle, vessel or a Passenger Bus. It is instructed that these

procedures are to be followed scrupulously. These are w.e.f. 01-12-2005.

V. Rule 67(3) by the deletion of the words mentioned in the G.O.

those units availing Industrial Incentives having Exports in excess of Rs. 10

Lakhs in a tax period, and unit having inputs 12.5% and outputs in @ 4% like

plastic dealers, are made eligible to claim refund in the same month if such

units have any excess input tax credit. This is w.e.f. 01-04-2005.

The officers are therefore requested to process refund claims of

Deferment cases in case they fall under exports, plastics or inputs 12.5% and

outputs (including CST) 4% categories.

20. CCT’s Ref. No. PMT/P & L / A.R.Com / 245 / 2005,dt. 06-01-2006

Ref : 1. CCT’s Ref. No. PMT/P&L/A.R.Com/2005, dt. 24-09-2005.

2. CCT’s Ref. No. PMT/P&L/A.R.Com/2005, dt. 24-11-2005.

3. This office notice section 67(5) of A.P. VAT Act, 2005.

ORDER

Pursuant to the notice issued in reference 3rd cited above, the applicant

along with the Sri. S. Krishna Murthy, Advocate and Sri. P.S.R. Swamy,

Company Secretary appeared and contented that the decision of Hon’ble High

Court of Kerala at Ernakulam in the case of Malankara Orthodox Syrian Church

v. Sales Tax Officer and Another (STC 135 P. 22) holding that supply of medicines

as part of treatment and the consequent liability of the dealer for registration

as well as for sales tax was rendered in light of the definition of the word

“dealer” under section 2(viii) of the Kerala General Sales Tax Act. It was

further contended that the definition of “dealer” under A.P. VAT Act, 2005

does not include supply of any goods by way of or part of any service, and

that the applicant was not a dealer within the meaning of the definition under

section 2(10) of A.P. VAT Act, 2005. However, no written submissions were

made either by the applicant or counsel for the applicant.

We have considered the above stated contentions. In the above-

mentioned decision, the Hon’ble High Court of Kerala among other things also

held that supply of medicine in the course of medical treatment has to be

taken as one of the main activities in a hospital. Therefore the supply of

711

medicines in the course of treatment is not mere incidental but integral part of

treatment and supply by itself or sale of medicine as such is part of business

in the hospital. It was further observed by the Hon’ble Court that hospitals

are billing and charging for the medicines supplied and going by the value of

the medicines involved in treatment, it was held that the value of such

medicines was substantial and not mere incidental. The Hon’ble Court further

repelled the contention of the petitioner regarding the service nature of the

hospital holding it as irrelevant after the 46th amendment to the Constitution

of India.

In the light of above decision of the Hon’ble High Court of Kerala, we

have re-examined the facts of the applicant.

Some of the invoices issued by the applicant have also been examined

by us and we find that the applicant charged for the drugs and medicines

supplied to the patients and the value of such medicines is separately

mentioned on the invoice. Likewise, some invoices also show value of the

costly implants like stints and catheters separately on the invoice. In the light

of decision of the Kerala High Court, we hereby clarify and issue a ruling that

the applicant is liable to tax to the extent of sale of drugs and medicines and

such other items / disposables / implants used as part of surgical procedures

and invoiced distinctly, at the rate applicable to such items as listed in the

schedules to the A.P. VAT Act, 2005.

As regards other issues on which ruling was already issued in the

reference 1st cited above and as modified in reference 2nd cited above the ruling

holds good.

21. CCT’s Ref. No. AIII (1)/5/06, dt. 10-01-2006

Sub : A.P. VAT Act, 2005 – Delegation of powers under section 37

of A.P. VAT read with Rule 59 – Authorisation to Area CTO

– Orders Issued – Regarding.

Ref : DC (CT) KNL. Rc. No. /S/31/99-00, dt. 18-11-2005.

In exercise of the powers vested under section 3(A) read with section 80

of A.P. VAT Act, 2005 and 59 (2) of A.P. VAT Rules, 2005, I, hereby authorise the

Commercial Tax Officer of the circle concerned to do re-assessment and to

pass the consequential orders on the original orders passed by the CTO (Int)

under APGST Act, 1957.

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22. CCT’s Ref. No. Spl. Com/01/2005, dt. 16-01-2006

Sub : A.P. VAT Act 2005 – Verification of records of Corporate

Hospitals certain lapses notices – Instructions issued –

Regarding.

The tax liability of certain Corporate Hospitals located in the State has

been reviewed. It is seen that in some cases certain unwarranted exemptions

are being allowed which have serious revenue implications. To clarify all

doubts on the liability of Corporate Hospitals for tax, the following

instructions are communicated for strict compliance.

1. Certain Corporate Hospitals are claiming exemption on the

turnovers of medicines, surgical disposables and implants such as stints and

heart valves used in the course of treatment of patients. This exemption is

based upon Advance Ruling given vide CCT’s Ref. No. PMT / P & L / A. R. Com

/ 245 / 2005 dated 20-08-2005. This advance ruling has been reviewed by the

same authority and revised ruling issued vide CCT’s Ref. No. PMT / P & L / A.

R. Com / 245 / 2005 dt. 06-01-2006. Copy of the revised ruling is enclosed.

The ruling should be strictly implemented and the turnovers shall be

assessed to tax by disallowing the ineligible exemptions. This ruling is based

upon the judgment of the Hon’ble High Court of Kerala in case of Malankara

Qethdox Syrain Church v. Sales Tax Officers (Vol. 135 STC Page 224).

2. Some hospitals are not showing any exemption particulars in

appropriate boxes of VAT 200 returns, but they are recording the exemptions

in their books of accounts. VAT 200 returns should be consistent with the

books of accounts.

3. Few hospitals supply medicines and other implants, purchased

from other States, and claim exemptions under package scheme of operations

irregularly. Being outside State purchase, the scheduled rate of tax, without

allowing any Input Tax Credit, should be realized in such situations.

4. Some hospitals have filed nil returns even though they have

regular sales and purchases of medicines and other items. It should be ensured

that forms are filled in correctly after thorough verification of records.

5. Some hospitals have not taken any registration under A.P. VAT

Act, but they indulge in purchases and sales of medicines to patients. Such

hospitals are to be identified and are to be got registered at the earliest and

legitimate taxes are to be realised.

6. Many hospital have not shown the correct turnovers of food sales

made at their canteens. The value of food, supplied to inpatients by canteens,

713

has not been reported. Some of the canteen lessees do not report the turnovers

of food supplies especially those made to inpatients. The value of food shown

in consolidated bills, is liable, to tax.

7. In some cases without any registration under A.P. VAT Act, 2005,

the canteens are run by private people and they receive amounts from hospital

authorities towards food supplied. These amounts are not reported to the

Department. Such practices should be curbed and all dealers registered.

8. Some canteens have not reported any turnovers for previous

years and they are paying only current taxes. Necessary action should be

initiated to recover past dues.

9. Other irregularities noticed are—

(a) Professional Tax is not being paid properly by certain hospitals.

(b) Certain hospital canteens are paying TOT, even though their sales

turnover is more than Rs. 40 lakhs.

(c) Some corporate hospitals are not paying Luxury Tax on the

accommodation provided to the patients, where charges of

Rs. 500/- or more are collected per day.

These practices should be strictly curbed.

All the Deputy Commissioners are requested to ensure that the assessing

authorities of their jurisdiction follow the above instructions scrupulously.

Compliance report be submitted on or before 15-02-2006.

The receipt of the Circular may be acknowledged by the return of post.

23. CCT’s Ref. No. AI (3)/72/2006, dt. 23-01-2006

Sub : Commercial Tax Department – Providing services to the

dealer s through Dealer Service Centers – Issue of waybills

promptly and in sufficient numbers – certain instructions

– Issued – Regarding.

Ref : 1. CCT’s Ref. AI (3)/687/2003 dt. 06-01-2004.

It is noticed that the waybills are not issued promptly and in sufficient

numbers at the Dealer Service Centers even to the highly tax compliant dealers.

There are instances of inordinate delay in issuing waybills to the dealers

without any justification. It is also still noticed that, in certain divisions, the

waybill books are maintained in the respective circles and the role of Dealer

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714 Circulars

Service Center is reduced to that of merely forwarding the applications for

issue of way bills to the assessing authorities and transmitting the stamped

waybills to the dealers, requesting for the same. Such a procedure defeats the

very purpose for which the Dealer Service Centers were set up. Further it is

noticed that unnecessary stamps like validity stamps are also affixed on the

waybills, issued to the dealers, even though they are not statutorily required.

Therefore, in order to ensure the prompt issue of waybills in sufficient

number to tax compliant dealers and not to cause undue hardship to them,

the following instructions are issued in modification of the earlier instructions,

issued in the reference, cited :

1. The Assessing Authorities shall prepare a positive list of dealers

in respect of whom there need not be any restriction on the issue

of waybills and furnish it to the Dealer Service Center. Against

each dealer the assessing authority will indicate the maximum

number of waybills that can be issued at a time. The maximum

limit of waybills in terms of number shall be fixed on the basis of

the requirement of the waybills by the dealer for 3 months. In

these cases, the duty of stamping of the dealers details on the

waybill can be delegated to the dealer concerned and need not be

done at Dealer Service Centre. However the office seal of the

Circle shall be affixed. In order to avoid delay, the Dealers Service

Center shall be provided with waybills, pre-stamped with the

office seal of the circle concerned. In all cases, where the waybills

are issued without the stamp of the dealers details an application

from the Authorised Signatory shall be insisted on with

attestation of the signature of the representative, who receives

the waybills in person.

2. Issue of statutory forms to all dealers not in the positive list shall

be as under :

Wherever such dealers, apply for issue of waybills, by the DSC’s shall

obtain prior clearance of the assessing authority, concerned, regarding number

of forms to be issued. Stamping of dealers details on the statutory form should

be ensured at the DSC prior to handing over such forms.

3. The positive list, mentioned above, shall be updated regularly by

the assessing authorities and such updated lists shall be provided

to the DSC from time to time.

4. Status of statutory forms shall be maintained in the DSC under

proper security. Issue of statutory forms should be done only

after proper entry in Form Track Software at the DSC level.

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5. The particulars of utilisation of the waybills, submitted by the

dealers at the time of filing the application for issue of waybills,

shall be forwarded by the DSC’s to the assessing authorities, who

in turn should verify those particulars with reference to the

turnovers, reported by the dealers in their returns within 7 days

of the receipt of such particulars from the DSC and file them along

with the returns for record. If, on such verification, it is found

that there is disproportionate variation between the turnover,

involved in the transactions, reported in the particulars of

utilization of the waybills and the turnovers, reported in the

returns filed, the assessing authority should take up VAT audit

immediately.

These instructions shall come into effect from 01-02-2006.

All the assessing authorities and Dealer Service Centers shall adhere

to the above instructions scrupulously and see that no hardship is caused

to the tax compliant dealers and quality services are extended to them

promptly.

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SALES TAX RELIEF

1. CCT’s Circular No. PMT/P & L / 2005-2, dt. 12-04-2005

Sub : A.P. VAT Act 2005 – Guidelines issued for processing /

approving transitional relief claims – Reg.

The attention of all the Deputy Commissioners (CT) in the State is invited

to the subject cited above. The transitional relief claims submitted by VAT

dealers in the field offices are to be processed and approved by the CT

Department within 90 days from the date of implementation of VAT. As it is

not possible for the officers to physically verify the genuineness of the claims

made by the VAT dealers, it is felt that certain guidelines shall be prepared

and issued to all the field officers involved in approving the claims. The

guidelines, if followed strictly, would enable the department in identifying

the wrong claims made. The guidelines are attached with this circular.

Therefore, all the Deputy Commissioners are requested to issue

necessary instructions to all the CTO’s under their jurisdiction to follow the

guidelines scrupulously while approving the transitional relief claims.

The receipt of the circular may be acknowledged immediately, and also

a copy of the instructions issued in this regard to the subordinate officers

should be furnished to this office.

Guidelines for approving transitional relief made onForm VAT 115 (Sales Tax Relief)

Following guidelines shall be followed while approving transitional

relief / sales tax relief claim made on Form VAT 115 :

1. Please check whether the goods on which credit is claimed are

falling under the items listed below :

(a) Goods listed in Schedule - I

(b) Goods listed in Schedule - VI

(c) Negative list goods – Rule 20 of A.P. VAT Rules

If the goods are falling under one of the above, the dealer is not eligible

for any sales tax relief. Hence, the officer approving shall verify this aspect

first and restrict the claim accordingly. Preferably, a copy of all the above three lists

shall be kept by the side of the officer approving the claims.

2. The date of invoice shall be checked to ensure that the goods have

been purchased between 01-04-2004 to 31-03-2005.

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3. Where the dealer has claimed tax relief on raw material

corresponding to finished goods or semi-finished goods, the officer

approving the claim can verify the quantum of raw material

required by ascertaining the same from business / industry

sources. In some industries where established input / output

ratios are available like rice mills (100 units of Paddy – 70 units of

Rice, 100 units of G.N. Seed – 40 units of oil + 60 units of GN Cake

etc.) the same norms shall be followed.

4. Where the dealer is claiming sales tax relief was availing some

kind of set-off under APGST Act, the officer approving shall verify

the last APGST Return to ascertain whether set-off under APGST

has been claimed on the stocks mentioned in Form VAT 115. If

set-off of tax has already been claimed under APGST Act, the

dealer is not entitled for any sales tax relief now on the by products

available if any, in the stock as on 31-03-2005. For example, if a

rice miller has stock of 300 quintals of rice bran. Since, on set-off

system available under APGST system, the tax paid on paddy

was already availed as set-off on sales of rice, the dealer is not

entitled to claim any relief on the stocks of rice bran. However,

if such VAT dealer possesses any rice as stock on 31-03-2005, he

is entitled to the relief of tax paid on the corresponding paddy.

Hence, attention must be paid to all the claims of dealers who

were availing some set-off under APGST Act. Examples of

this are Vegetable oil industry, set-off on copper, re-rolling mills

etc.

5. Check whether the dealer is claiming any relief of TOT. Remember

the dealer is not eligible for relief of TOT.

6. Also check whether the dealer is claiming any relief of CST.

Remember the dealer is not eligible for relief of CST.

7. Where the dealer is claiming sales tax relief on purchase point

goods, check whether such tax has already been paid by the dealer

under APGST Act or not. This is easily done, as the dealer’s APGST

file is also available in the same office. Example, agricultural

goods like paddy, chillies etc.

8. The officer shall verify the APGST file (A2 return file) to satisfy

himself that the dealer has tax paid goods in stock. In the event

of dealer having paid any tax under APGST Act on certain pur-

chases from outside the state and such goods are in stock as on

31-03-2005.

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718 Circulars

9. If an hotelier, who is a VAT dealer, has filed a claim on Form VAT

115 and subsequently also files Form VAT 250 in April, reject the

claim, as the dealer is not eligible for relief. Remember any VAT

dealer opting for composition is not eligible for input tax credit.

10. The officers approving relief claims shall pay attention to the

claims of works contractors and hoteliers. If such dealers opt for

composition later, dealer shall pay tax according to provisions in

Rule 37(5).

11. The officer approving shall also pay attention to the purchases

made from Tax holiday units. Any purchase from a tax holiday

unit is not eligible for sales tax relief. As the officer is not in the

know-how of list of tax holiday cases, he should enquire from the

dealer or other sources wherever he gets a doubt.

For example : Invoice issued by a manufactured but no tax

element is shown. A list of tax holiday units is issued to all DCs /

CTOs. Whenever in doubt, verify this list.

12. If the VAT dealer claiming relief on VAT 115 happens to be a

manufacturer, he would have purchased bulk of his material

@ 4% against G-Forms. Check such cases where the manufacturer

is claiming more than 4% on his purchases.

13. Wherever possible, the approving authority shall check the

quantum of stock available with the Audit Reports filed by the

dealer for earlier years. In cases of huge discrepancy, verification

shall be made.

14. All the doubtful cases shall be noted down by the approving

authority and shall be taken up for verification with the approval

of Deputy Commissioner concerned. The DC shall limit such

verifications to 10-15 cases per circle.

2. CCT’s Circular No. PMT/P & L / 2005-5, dt. 07-06-2005

Sub : A.P. VAT Act 2005 – Instructions issued for processing /

approving transitional relief claims – Reg.

Ref : CCT’s Circular No. : PMT / P & L / 2005-2, dt. 12-04-2005.

The transitional relief claims submitted by VAT dealers are to be

processed and approved by the CT Department within 90 days from the date

of implementation of VAT i.e. by 30th June 2005. Since it is not possible for the

719

officers to physically verify the genuineness of the claims made by all the VAT

dealers, certain guidelines were issued to all the field officers in reference cited.

In continuation of the guidelines the following instructions are issued

for the approving the claims of sales tax relief made by the VAT dealers :

1. The approving authority can select the doubtful cases or cases of

wrong claims, as per the guidelines issued for the purpose of

scrutiny/audit. From among the so identified cases the approving

authority can make a visit to the business premises of the claiming

dealer in 10 cases. The Deputy Commissioner can select any cases

over and above 10 in any circle and get them verified by entrusting

to the Assistant Commissioner.

2. In remaining cases, the approving authority has to conduct desk

audit by calling for the information from the claiming dealer.

3. In case the approving authority finds any discrepancies in the

claim he has to either reduce the claim or reject the claim and

issue show cause notice in Form VAT 117.

4. In case of issue of Form VAT 117 the reasons for either reduction

or rejection should be captured in the notice in Form VAT 117. It

is also advised to take a copy of report of “View errors” and

attach to the notice in Form VAT 117 in case it is identified as

calculation errors. This should be done before 20th of June 2005.

5. In cases where the approving authority finds no inconsistencies

he can approve the claim in to and authorize the claim in Form

VAT 116 after 20th June 2005. The date of issue of Form VAT 116

will be intimated before 20th June 2005.

The Deputy Commissioners are requested to issue necessary instructions

to all the approving authorities under their jurisdiction to follow the

instructions scrupulously while approving the transitional relief claims.

The receipt of the circular may be acknowledged immediately.

3. CCT’s Circular No. PMT/P&L/2005-8, dt. 20-07-2005

Sub : A.P. VAT Act 2005 – Guidelines to verify the sales tax relief

claims – Reg.

Ref : 1. CCT’s Circular No. PMT / P & L / 2005-2 dt. 12-04-2005.

2. CCT’s Circular No. PMT / P & L / 2005-5 dt. 07-06-2005.

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720 Circulars

3. Video conference with Deputy Commissioners on

18-07-2005.

It is noticed that the volume of sales tax relief claims on transition stocks

are very large. There is a need to thoroughly verify the claims carefully to

restrict the false claims from being approved by the authorities concerned.

The following guidelines should be kept in mind while processing the sales

tax relief claims made by the dealers.

The Deputy Commissioners are requested to instruct the field officers

to follow the following instructions while approving the claims made by the

dealers.

1. Stock taking statement taken by the dealer may be verified with

reference to the claim made by the dealer on Form VAT 115. In

case if the dealer is not in possession of such statement, the claim

made by the dealer may be rejected. (Rule 37(2) (e))

2. While verifying the claims the field officers may take recourse

FIFO (First In First Out) method. For example a dealer of Electrical

goods is having 100 bundles of electrical wire of particular brand.

He is having the purchases from both within the State and

from outside the State. He purchased 200 bundles from outside

the State on 25-02-2005 and 300 bundles from local dealers on

26-01-2005. He might have claimed the closing stock for sales tax

relief as purchases from local dealers. But as per FIFO method the

closing stock is related to the purchases from outside the State

since these purchase are later than the local purchases.

This analogy may be applied to other goods and arrive at the eligibility

of the goods for claiming the sales tax relief.

3. It is noticed that there are instances of circular bill trading in case

of sales tax relief claims particularly in trades like Iron and Steel

and Paddy and Rice. In cases of large claims the Deputy

Commissioners concerned should get verify the bills so traded

and trace their origin point in co-ordination with the Deputy

Commissioners concerned. They must verify the point where

local tax was paid.

4. In cases of claims above Rs. 10 lakhs, the Deputy Commissioners

concerned are directed to verify all the cases even if the claim has

been approved. In all other cases where claim is below Rs. 10

lakhs the AC LTU / CTO concerned should verify the claims on

the basis of above guidelines in addition to the guidelines already

issued. (Enclosed for ready reference).

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5. The field officers are requested to stop authorizing the claims on

Form VAT 116 or Form VAT 126 unless they confirm that

verification is completed and necessary conclusions are being

made. You are however authorized to issue Form VAT 117 notices.

6. The Deputy Commissioners are provided with the report on sales

tax relief claims in the link MIS > Tax incidence > Report on sales

tax relief dealer wise > Division > Circle wherein he / she can view

and take print of the dealer wise details of sales tax relief claimed

and approved. This will be useful to monitor the claims in the

division.

Deputy Commissioners must ensure that he is satisfied with the verifi-

cation of claims above Rs. 10 lakhs before accepting the claim. Assistant

Commissioners LTU / Commercial Tax Officers concerned must ensure that

proper verification is carried out before approving the claims below Rs. 10

lakhs.

In case of any lapse on the part of approving authority which results in

excess claim been approved, the authority will be held responsible and suitable

disciplinary action will be initiated against him / her.

4. CCT’s Circular No. PMT/P&L/2005-10, dt. 16-08-2005

Sub : A.P. VAT Act 2005 – Guidelines to verify the sales tax relief

claims – Hiring of the services of Cost Accountants in

Auditing of the claims – Reg.

Ref : 1. CCT’s Circular No. PMT/P&L/2005-2 dt. 12-04-2005.

2. CCT’s Circular No. PMT/P&L/2005-5 dt. 07-06-2005.

3. CCT’s Circular No. PMT/P&L/2005-8 dt. 20-07-2005.

4. CCT’s Circular No. PMT/P&L/2005-9 dt. 11-08-2005.

5. CCT’s Ref No. PMT/P&L/2005 dt. 17-08-2005.

Attention of the Deputy Commissioners is invited to the references cited,

wherein instructions were issued for the processing of sales tax relief claims

filed by the dealers on Form VAT 115. The Deputy Commissioners were

instructed to verify the claims exceeding the tax amount of Rs. 10 lakhs in the

division, vide reference 3 cited above. All the claims are to be approved or

rejected by 31st August 2005 positively, so as to facilitate the dealer to claim

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722 Circulars

the approved amount of sales tax relief in the return of August 2005 to be filed

on or before 20th September 2005.

To facilitate the quick and effective approval / rejection of the sales tax

relief claims, Deputy Commissioners are now requested to engage the services

of the Cost Accountants, wherever they feel necessary. They are requested to

contact Sri A.V.N.S. Nageswara Rao, Ex-Officio Member. The Institute of Cost

and Works Accountants of India, Hyderabad Chapter on his telephone Nos

040-27225591® 9849299070 (Cell) to help the Departmental Officers in auditing

the sales tax relief claims. The Cost Accountant who is attending the auditing

of the sales tax relief claims, as engaged by the Deputy Commissioner, shall be

paid Rs. 750/- per audit and Rs. 200 as daily charges in cases if audit is taken

up in the same place (city / town / village) where the Cost Accountant is

located. If the place of audit is other than the place where the Cost Accountant

is located, an amount of Rs. 500/- shall be as daily charges along with the basic

Rs. 750/- per audit. The Deputy Commissioners are requested to make

arrangements for the payment of the same from their budget provisions.

Necessary orders in this matter will be communicated.

Further the Deputy Commissioners are requested to utilise the services

of the Cost Accountants especially in arriving at the stock variation with

reference to the Trading Account of the dealer as on the date of audit which is

as following :—

1. Opening stock as on 01-04-2005

(Closing stock as on 31-03-2005 as per books

of accounts)* Rs.

2. Add purchases during the period Rs.

3. Total purchases (1+2) Rs.

4. A. Sales up to the date of audit Rs.

B. Less Gross Profit (Average to the dealer / trade) Rs.

C. Purchase value of the goods put to sale (4A – 4B) Rs.

5. Stock to be available on the date of audit (3 – 4C) Rs.

6. Closing Stock (Physical Stock available on

the date of audit) Rs.

7. Deficit / Excess of Stock (5-6) Rs.

* Wherever necessary, closing stocks declared during the sales tax relief

claim, bank statements made for closing stocks and insurance charges for

stock held can be verified.

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The same method may be used to arrive at the stock variation in

quantities also.

The Deputy Commissioners are requested to utilize the services of the

Cost Accountant to the fullest extent and hasten up the process of approving

/ rejecting the sales tax relief claims. The result of the audit should be intimated

to the undersigned on or before 5th September 2005.

5. CCT’s Circular No. PMT/P&L / 2005-12, dt. 31-08-2005

Sub : A.P. VAT Act 2005 – Processing and finalization of approvals

in case of Sales Tax Relief – Instructions issued – Reg.

Ref : 1. CCT’s Circular No. PMT/P&L/2005-2 dt. 12-04-2005.

2. CCT’s Circular No. PMT/P&L/2005-5 dt. 07-06-2005.

3. CCT’s Circular No. PMT/P&L/2005-8 dt. 20-07-2005.

4. CCT’s Circular No. PMT/P&L/2005-10 dt. 16-08-2005.

Instructions for processing of Sales Tax Relief claims have been issued

in the references cited to be followed strictly by the authorities concerned.

These instructions have extended the scope of verification and resulted in

further restriction of the amount of claim made by the dealers. This has

necessitated reissue of Form VAT 116 and Form VAT 117s to the dealers. To

avoid the delay in reissue of these Forms a window has been made operational

from 29-08-2005. This window is available in CT login in the General module

under the heading “Generate VAT 116 or VAT 117”. Path : CT Login > General

Module > Generate VAT 116 or VAT 117. Procedure for using the window is

made available in the Home Page (PPT explaining the navigation of the window

is mailed to all the DCs, ACs and CTOs).

Since one sixth of the approved amount of sales tax relief has to be

claimed by the dealer, in the return for the month of August 2005 to be filed on

or before 20th September 2005, the process of approval should be completed

immediately. It is hereby informed that the issue of Form VAT 116 (approval

of claim by the authorizing authority), and Form VAT 126 (authorization of

the claim by the authorizing authority after Form VAT 117) shall be speeded

up and completed before 10th September 2005 so that the dealer can claim in

the return for the month of August 2005. The AC LTUs and CTOs are hereby

requested to issue Form VAT 116 or Form VAT 117 if they satisfy that the

claims made by the dealer are in order, even though the physical verification

of the dealer is not taken up due to paucity of time. In such cases it should be

Sales Tax Relief

724 Circulars

ensured that verification for all major large volume cases is completed by

10th September 2005. The smaller cases can be verified after 10th September

and action to restrict credit can be taken for these cases in subsequent returns.

For all large volume cases Deputy Commissioners and Commercial Tax Officers

should ensure that verification is completed by 10th September to ensure that

1/6th claim made in the return related to August 2005 to be filed in September

2005, is only as per eligibility after verification.

The dealer who have claimed Sales Tax Relief and who does business in

exempt goods or engage in exempt transactions along with taxable goods or

who opted for composition have to file the Additional return in Form VAT

200G along with regular return in Form VAT 200 and VAT 200 A every month

(along with the returns filed for the months of August 2005 to January 2006),

restricting the sales tax claimed amount. The dealers have to file additional

return in Form VAT 200H along with the return in Form VAT 200, for the

month of March 2005. The AC LTUs and CTOs are requested to obtain the

above said forms every month from those dealers as specified above and ensure

that the sales tax relief is restricted to the extent of sale of exempt goods and

exempt transactions. (The procedure to calculate input tax credit in case of

transitional relief (TR) during first year of implementation and the Forms

VAT 200G and VAT 200H are attached for ready reference).

All the AC LTUs and CTOs are requested to finalise the process of issuing

final approval of Sales Tax Relief claims so as to enable the dealers to know the

quantum of relief available to them and to facilitate them to claim the one

sixth of the same in the return for the month of August 2005.

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